Retail Research

Savills Research & Consultancy delivers objective advice to clients in order to help them make well-informed real estate related decisions and realise pre-defined goals.

Featured report

Japan Retail - October 2018
23 October 2018

Retail rents are trending upward, supported by a positive economic climate. Inbound tourism and improvements in transportation infrastructure should be key to the growth of regional markets. Although investment volumes have declined, acquisition interest, particularly in prime retail, appears to remain sound.

Japan is evolving as a global travel destination, and the retail market is benefitting from the explosive growth of inbound tourism. The impact is being felt across various retail sectors. If the country skillfully targets different tourist preferences, some of Japan's retail market could continue to grow even faster than the rapidly expanding hospitality industry.

Ginza, Omotesando, Shibuya, and Shinjuku are seeing redevelopment and expansion. Retail sales, wages, and consumer confidence are all mildly positive. Investment volumes appear on track to exceed 2016 totals, though tight yields are still making buyers cautious.

Stable rental trends from last year have continued through mid-2016. Slight moderations in 1/F rents are offset by growth in non-1/F rents, resulting in little overall movement. A late uptick in consumer confidence and retail sales may hint at mild increases ahead. Chinese "bakugai" appears to have fallen off due to new import duties in China, but the long-term trend for tourist spending is still positive.

Rental growth has paused in light of recent economic uncertainty, but investment volumes continue to increase and redevelopment projects are breathing new life into major Tokyo districts. Record-breaking inbound tourism could offer significant upside potential to select retail businesses.

Improvements in household spending and an increase in overseas tourists are tailwinds for the overall retail industry. Retail sales efficiency is on the rise and is expected to pick up further, especially in large cities. This will in turn lead to an improvement in rental affordability, and rental levels are likely to rise.

Japan continues to urbanise, with its population gravitating towards its largest cities and sleeper towns. Key high-street retail destinations and suburban shopping centres are therefore well positioned to benefit from the recent economic revival catalysed by Prime Minister Abe’s cabinet and the Bank of Japan.